Law:

Section:

Section 80-IC, read with sections 6, 245Q and 245U, of the Income-tax Act, 1961 - Deductions - Undertakings or enterprises in certain special category States - Applicant, a resident of Netherlands, wants to establish a manufacturing unit for formulation of pharmaceuticals in partnership with her husband in State of Himachal Pradesh, India, to avail of tax holiday under section 80-IC in said State - 'B', a resident company, proposes to have their products manufactured at said proposed unit by outsourcing production but under their license and control for which 'B' would pay negotiated processing charges to firm - In addition to that, firm would also procure direct business - On facts stated, applicant has sought ruling of Authority on question as to whether firm would be entitled to exemption under section 80-IC against direct business procured by it and in respect of processing charges received by firm from 'B' and secondly, whether profits and gains included in gross total income of 'B' derived from production outsourced to firm would be exempted under section 80-IC - Whether since in instant case de facto control and management of affairs of firm would be with applicant's husband in India, firm cannot be said to be non-resident entity and in such circumstances, application would not be maintainable - Held, yes - Whether further, as with reference to questions of exemption under section 80-IC against direct business and in respect of processing charges, complete facts have not been placed before Authority, no ruling can be made in respect of said questions in a hypothetical manner - Held, yes - Whether further since question regarding exemption under section 80-IC pertaining to profits and gains derived by 'B' from production outsourced to applicant's firm, and included in gross total income of 'B', being beyond scope and consideration of 'Advance Rulings' under Chapter XIX-B, same cannot be entertained - Held, yes - Whether, therefore, application would be rejected - Held, yes FACTS The applicant, a resident of Netherlands, wants to establish a manufactur- ing unit for the formulation of pharmaceuticals in partnership with her husband in the State of Himachal…

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